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Understanding and Managing Debt: A Comprehensive Guide for Financial Wellness

Learn about the importance of debt advice, causes of over-indebtedness, and the overall view of debt in the UK. Discover how life events and financial behaviors can lead to debt accumulation, and explore strategies for effective debt management. Find out how debt affects different demographics and the positive impact of seeking debt advice from our experts.

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Understanding and Managing Debt: A Comprehensive Guide for Financial Wellness

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  1. The importance of debt advice Colin Kinloch 9 December 2013

  2. Our statutory role • Assisting members of the public with the management of debt, • Working with other organisations which provide debt services, with a view to improving • (i) the availability to the public of those services; • (ii) the quality of the services provided; • (iii) consistency in the services available, in the way in which they are provided and in the advice given. • Financial Services Act 2012

  3. Causes of over-indebtedness Life events are the biggest trigger of indebtedness But macro factors can also influence attitudes and behaviours For some, it is a gradual change • Cost of childcare increasing or children staying at home longer • Maintaining a chosen lifestyle in a time of low rates of income growth • Balance between luxury and necessity • Having a baby • Financing a home • Death of a partner • Redundancy • Sickness • Disability • Increasing cost of living • Wage freezes • Reduced working hours • General lack of confidence • Reduced consumer spending And for many, a new life event is coming…… For some, there is a general acceptance of living in debt Some are in debt due to poor financial management • Family and friends in the same situation • Resignation that it will ‘always be like this’ • Too much owed on credit cards • Still paying back a large personal loan • Poor budgeting • Depending on payday loans • Missing creditor payments Sources: IFF User Needs research, YouGov Effectiveness research, MAS Foundation Research

  4. Debt in the UK – the overall view • Estimate that 8.8m people are over-indebted • 75% are under 45 • Half have a household income <£20k • 41% work full time • 48% own their home (with or without a mortgage) • 27% rent privately • 66% find keeping up with bills a heavy burden • 64% have fallen behind with credit commitments in the last 3 months • 76% would describe themselves as being in debt • 42% have been chased by creditors in last year • One third are young people Sources: Public Knowledge / Experian Segmentation Research

  5. Prison & probation

  6. Where we work YOI Brinsford YOI Swinfen Hall HMP Bedford, HMP Birmingham (Winson Green) HMP Hewell HMP Featherstone HMP Shrewsbury HMP Blundeston HMP Bure Source: Optimisa advice effectiveness research

  7. Satisfaction Source: Optimisa advice effectiveness research

  8. Overall situation Source: Optimisa advice effectiveness research

  9. Positive impact Source: Optimisa advice effectiveness research

  10. Actions Source: Optimisa advice effectiveness research

  11. colin.kinloch@moneyadviceservice.org.uk

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